Amazon attempts to break below support, but Evercore thinks it’s a “Buffett buy” stock

By:
on Dec 20, 2022
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  • Amazon stock has lost 50% of its value YTD
  • Evercore ISI sees a lot of potential in Amazon stock, labelling it a “Buffet buy”
  • The stock battles support and face further decline

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After losing half of its value year-to-date, investors seem not done yet with Amazon.com, Inc. (NASDAQ:AMZN) stock. AMZN traded lower on Tuesday as stock markets weighed on the impending recession.

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Amazon stock has now lost 8.57% in five days amid concerns about higher rates and the state of the economy. The risks have been heightened by the latest Bank of America report showing the possibility of a recession in the first quarter of 2023. Economists note that the recent 50 bps rate hike by the Federal Reserve did little to avert the recession outlook for stocks. The analysts project a negative GDP for the US next year.

Nonetheless, Evercore ISI Research has labelled Amazon stock a “Buffet buy” despite the bear pressure. According to the analysts, Amazon has three levers it can tap to unlock value heading next year. 

The first level of value mentioned by Evercore is Amazon’s ambitious projects. The analysts laud Amazon’s investment into robotics, video entertainment, Alexa, and AV as some of the growth drivers. The second lever is the untapped advertisements through Amazon Prime Video. The analysts say this is an easy opportunity for the tech giant. Finally, analysts expect Amazon to buy back shares using its cash pile of nearly $80 billion. These are expected to boost the share price.

With the growth levers, Evercore says these are factors that could make Warren Buffet buy Amazon again. The investor owns around $1.2 billion of the stock, bought through Berkshire Hathaway in 2019.

AMZN stock outlook and analysis

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AMZN Chart by TradingView

Amazon stock maintains a downtrend on the daily chart. The stock trades at a support zone with weakening momentum. The MACD indicator is bearish.

Is AMZN a good investment?

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Investing in Amazon now is premature. Both technical and fundamental factors are not favourable. Nonetheless, Evercore has a price target of $150 for the stock, although the analysts think this should be a long-term buy.

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